Dine Brands Global, Inc. (DIN)

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management's Discussion and Analysis of our results of operations and financial condition should be read in conjunction with the Condensed Consolidated Financial Statements included in this Form 10-Q. This Item 2 is organized as follows:

•Consolidated Results

•Key Performance Indicators

•Segment Results

•Non-Segment Results

•Liquidity and Capital Resources of the Company

•Critical Accounting Estimates

Consolidated Results

Total revenues for the three months ended June 28, 2026 increased $10.1 million compared to the prior year quarter. The increase was driven by a $19.1 million increase in company-owned restaurant revenues from restaurants acquired and opened since the second quarter of 2025. This increase was partially offset by a $7.8 million decrease in franchise revenue from lower proprietary product sales, international franchise performance, less franchise termination fees recognized in the current period, and a decrease in Applebee's same restaurant sales change. In addition, franchise revenues decreased as a result of closures and the acquisition of 12 Applebee's restaurants in February 2026 and 48 Applebee's restaurants in June 2026. Total cost of revenues increased $11.1 million primarily due to the increase in company-owned restaurants, partially offset by lower bad debt expense as compared to the prior year quarter.

Income before income taxes in the three months ended June 28, 2026, was lower due to a decrease in gross profit, increase in general and administrative expenses, increase in interest expense and an increase in closure and impairment charges. The increase in general and administrative expenses is primarily due to our investment in company-owned and dual-branded restaurant initiatives, increased reorganization costs, and higher professional service fees from the acquisition of additional company-owned restaurants. The increase in interest expense is primarily the result of the refinancing of our 2025 Class A-2

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Notes completed in June 2025 which resulted in increased principal and a higher interest rate. Closure and impairment charges increased primarily due to the impairment of trademarks.

Total revenues for the six months ended June 28, 2026 increased $20.6 million compared to the prior year period, driven by a $30.9 million increase in company-owned restaurant revenues from restaurants acquired and opened since the second quarter of 2025. This increase was partially offset by a $9.0 million decrease in franchise revenues from lower franchisee termination fees, lower proprietary product sales due to a decrease in the types of product offerings, and a reduction in the number of franchised restaurants. The reduction in the number of franchised restaurants was primarily driven by acquisitions completed since the second quarter of 2025 and closures. Total cost of revenues increased $24.6 million primarily due to an increase in company-owned restaurants, partially offset by a decrease in bad debt expense compared to the prior year period.

Income before income taxes in the six months ended June 28, 2026, was lower due to a decrease in gross profit, increase in interest expense and an increase in general and administrative expenses, partially offset by a gain on disposition of assets. The increase in interest expense is primarily the result of the refinancing of our 2025 Class A-2 Notes completed in June 2025 which resulted in increased principal and a higher interest rate. The increase in general and administrative expenses is primarily due to our investment in company-owned and dual-branded restaurant initiatives and higher year to date incentive compensation due to an increase in the number of employees and higher expectations for the remainder of the year as compared to the prior year period. Gain on disposition of assets was primarily related to the sale of land and building of two IHOP restaurants.

Key Performance Indicators

In addition to revenues, cost of revenues, and gross profit in evaluating the performance of each of our brands, management also considers the following key performance indicators in evaluating our business:

"System sales" are retail sales at IHOP, Applebee’s and Fuzzy's restaurants operated by franchisees reported to the Company and revenues generated at company-owned restaurants. Sales at restaurants that are operated by franchisees are not revenues attributable to the Company. An increase in system sales of franchised restaurants will result in a corresponding increase in our royalty revenues, while a decrease will result in a corresponding decrease in our royalty revenues.

"Domestic same-restaurant sales change" reflects the percentage change in sales of domestic restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.

"Same-restaurant sales change" reflects the percentage change in sales of domestic and international restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.

"Domestic average weekly unit sales" represents the average sales generated per restaurant per operating week during the reporting period. This is calculated by dividing total restaurant sales by the number of operating weeks for all restaurants open during the period. For restaurants that were open for only part of the period, adjustments are made to the number of operating weeks to correspond to the period there were restaurant sales.

"Net development" refers to the overall change in the number of restaurants during a period, calculated as total openings less total closures.

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Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

General

The following provides a discussion of our results of operations for fiscal 2025 as compared to fiscal 2024 and should be read together with the financial statements included in this Annual Report on Form 10-K. For discussion of our results of operations for fiscal 2024 and 2023 results, please refer to “Management's Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024. This Item 7 is organized as follows:

•Consolidated Results

•Key Performance Indicators

•Segment Results

•Non-Segment Items

•Liquidity and Capital Resources of the Company

•Critical Accounting Estimates

•Recent Accounting Pronouncements

Consolidated Results

Total revenues increased $67.0 million in fiscal year 2025 compared to fiscal year 2024, largely driven by $95.3 million increase from the Company-owned restaurant segment from restaurants acquired over the last 14 months. This increase was partially offset by a $20.5 million decrease in franchise revenues due to lower system sales and a $7.8 million decrease in rental revenues. Total cost of revenues increased $83.0 million primarily due to an increase in Company-owned restaurant expenses.

Income before income taxes in fiscal year 2025 decreased compared to fiscal year 2024 largely due to increases in closure and impairment charges, decrease in gross profit, increases in general and administrative expenses, and increase in interest expense. The increase in closure and impairment charges is primarily due to a $29 million non-cash impairment charge recorded in the fourth quarter of 2025 related to the Fuzzy's tradename intangible assets. The increase in general and administrative expenses is primarily due to an increase in compensation-related expenses and an increase in professional service fees. The increase in interest expense is primarily the result of the refinancing of our Fixed Rate Senior Secured Notes Series 2025-1 completed in June 2025. This increase is driven by an increase in the interest rate and an increase to the principal, partially offset by a decrease in the Credit Facility interest.

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Key Performance Indicators

In addition to revenue, cost of revenues, and gross profit in evaluating the performance of each of our brands, management also considers the following key performance indicators in evaluating our business:

"System sales” are retail sales at IHOP, Applebee’s and Fuzzy's restaurants operated by franchisees reported to the Company and revenues generated at Company-owned restaurants. Sales at restaurants that are operated by franchisees are not revenues attributable to the Company. An increase in system sales of franchised restaurants will result in a corresponding increase in our royalty revenues, while a decrease will result in a corresponding decrease in our royalty revenues.

“Domestic same-restaurant sales change” reflects the percentage change in sales of domestic restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.

“Same-restaurant sales change” reflects the percentage change in sales of domestic and international restaurants in any given fiscal period that operated during the comparable prior year period and have been open for at least 18 months. Due to new restaurant openings and restaurant closures, the restaurants open throughout both fiscal periods being compared may be different from period to period.

"Domestic average weekly unit sales" represents the average sales generated per restaurant per operating week during the reporting period. This is calculated by dividing total restaurant sales by the number of operating weeks for all restaurants open during the period. For restaurants that were open for only part of the period, adjustments are made to the number of operating weeks to correspond to the period there were restaurant sales.

"Net development" refers to the overall change in the number of restaurants during a period, calculated as total openings less total closures.

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(a)Applebee's System same-restaurant sales change and Franchise same-restaurant sales change for fiscal year 2023 was 0.7% and 0.7%, respectively.

(b)The franchise sales percentage change for 2025 was impacted by the acquisition of 47 Applebee's restaurants in November 2024, 10 IHOP restaurants in March 2025, and 12 Applebee's restaurants in May 2025 now reported as company-owned.

(c)Included in the IHOP franchise restaurants closed and IHOP company-owned restaurants opened are 10 restaurants acquired by the Company in March 2025. Included in the Applebee's franchise restaurants closed and Applebee's company-owned restaurants opened are 12 restaurants acquired by the Company in May 2025 and 56 restaurants acquired by the Company in November 2024.

(d)Included in the Applebee's franchise restaurants opened and Applebee's company-owned restaurants closed are nine restaurants refranchised by the Company in 2024.

Dual-branded restaurants are defined as restaurants that operate our IHOP and Applebee's restaurant concepts under two separate franchise agreements but within one restaurant location. Because of this, each dual-branded restaurant is counted as part of both IHOP and Applebee’s restaurant count and activity.

As of December 28, 2025, we had 27 dual-branded domestic IHOP and Applebee's restaurant locations. Of these 27 locations, we had 26 existing IHOP or Applebee’s restaurants which added a second brand and one new restaurant which added both brands, totaling 28 dual-branded domestic openings.

As of December 28, 2025, we had 32 dual-branded international IHOP and Applebee's restaurant locations. Of these 32 locations, we had 10 existing IHOP or Applebee’s restaurants which added a second brand and four new restaurants which added both brands, totaling 18 dual-branded international openings in 2025. The remaining dual-branded locations were opened prior to 2025.

As of December 29, 2024, we had 18 dual-branded international IHOP and Applebee's restaurant locations. Of these 18 locations, we had four existing IHOP or Applebee’s restaurants which added a second brand and seven new restaurants which added both brands, totaling 18 dual-branded international openings in 2024. The remaining dual-branded locations were opened prior to 2024.

As our dual-branded business expands, we may reevaluate how these restaurants are counted in future disclosures.

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IHOP’s system domestic same-restaurant sales increased 0.3% for the three months ended December 28, 2025 and decreased 1.5% for the year ended December 28, 2025, as compared to the same respective periods of 2024. The increase for the three months ended December 28, 2025 was primarily driven by an increase in traffic, partially offset by a decrease in average check. The decrease for the year was primarily due to a decrease in average check, resulting from the introduction of our new everyday value menu.

Based on data from Black Box Intelligence, a restaurant sales reporting firm (“Black Box”), IHOP domestic same-restaurant sales outperformed for the three months ended December 28, 2025 and underperformed for the twelve months ended December 28, 2025 in the family dining category (excluding IHOP), as compared with the same respective periods of fiscal 2024. According to Black Box, the family dining category experienced a decrease in same-restaurant sales resulting from a decrease in customer traffic, partially offset by an increase in average customer check for the twelve months ended December 28, 2025.

(1) Primarily to-go, delivery and catering sales.

IHOP's off-premise sales for the three and twelve months ended December 28, 2025 incr

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